March 27, 2018
The SEC charged California-based energy storage and power delivery product manufacturer Maxwell Technologies, Inc.
and one of its former sales executives Van Andrews
in a fraudulent revenue recognition scheme designed to inflate the company’s reported financial results. According to the SEC’s order, Maxwell Technologies prematurely recognized revenue from the sale of ultracapacitors - small energy storage and power delivery products - in order to better meet analyst expectations. Andrews, a former Maxwell sales executive and corporate officer, allegedly inflated the company’s revenues by entering into secret side deals with customers and by falsifying records in order to conceal the scheme from Maxwell’s finance and accounting personnel and external auditors. Maxwell’s former CEO David Schramm
and former controller James DeWitt
also were charged for failing adequately to respond to red flags that should have alerted them to the misconduct. The SEC’s order found that Maxwell and Andrews violated antifraud, books and records, and internal accounting controls provisions of the federal securities laws and that Andrews caused certain violations by Maxwell. Both Maxwell and Andrews consented to the SEC’s order without admitting or denying the allegations and agreed to pay penalties of $2.8 million and $50,000, respectively. Andrews also agreed to be barred from serving as an officer or director of a public company for five years. Without admitting or denying the findings that they caused certain violations by Maxwell, Schramm agreed to pay a total of nearly $80,000 in disgorgement, prejudgment interest, and penalty and DeWitt agreed to pay a $20,000 penalty. SEC